Morgan Stanley: All grown up

Gorman painted a picture of a bank that has eschewed the rebellious and risky behavior of its adolescence for a conservative role as a bank -- not a trading outfit in a bank's clothing.

"If investors want to invest in hedge funds, they shouldn't be doing it through Morgan Stanley," Gorman said.

The new and improved Morgan Stanley is "maniacally focused" on cutting expenses, managing risk and aggressively controlling its cash reserves, Gorman explained.

In response to an investor question about Moody's expected downgrade of U.S. banks, Gorman said Morgan Stanley could withstand even a three-notch cut its credit rating, calling it a "manageable outcome," due to the bank's liquidity.

In his presentation, Gorman spent time outlining just what Morgan Stanley got rid of to become a more conservative bank, including spinning off its hedge fund FrontPoint and closing its so-called proprietary desks that made large bets on the market's direction with the bank's money. The bank has also made efforts to divest of other odd investments made during better times.

"We should never have been a part owner of a casino in Atlantic City," he said, referring to the bank's attempts to build Revel, a high-end casino in New Jersey, which it took a $1 billion loss on.

On the eve of when Jamie Dimon, JPMorgan's (JPM) CEO, plans to testify before Congress on the bank's $2 billion and growing loss, Gorman took pains to distinguish his bank's risk-taking from that of its rival, without ever mentioning it by name. Gorman said every position greater than $10 million is scrutinized by a risk committee.

Allowing himself a few pats on the back, Gorman told the audience: "We've probably done more strategically in three to four years than most corporations of our size do in 30 years."

Still, Gorman made it clear that investors aren't applauding yet. "We happen to think we got a lot of the decisions right. The market doesn't reflect that yet."

Meanwhile, Gorman never mentioned his firm's role as lead underwriter for Facebook's (FB) botched initial public offering, and investors didn't either during a 15 minute Q&A session. With a potential Moody's downgrade looming, Gorman doesn't get to breathe too easy, but Morgan Stanley's CEO was probably relieved to avoid the "F" word in public this time around.

Shares of Morgan Stanley are down 12% in 2012 and 51% since the end of 2010.

Maureen Farrell is a staff writer at CNNMoney and covers Wall Street, banking, mergers and the stock and bond markets. Prior to joining CNNMoney, she covered venture capital and entrepreneurs for Forbes, and mergers and bankruptcy for Mergermarket and Debtwire, both divisions of the Financial Times.